U.S. Long-Term Bond Buybacks Double as Stablecoins Emerge as a Major Buyer of Short-Term Treasuries [Crypto Briefing]

[Financial News] As the U.S. Department of the Treasury expands its long-term Treasury bond buyback program by more than twofold, dollar stablecoins are emerging as a potential source of demand for short-term U.S. Treasury bonds. As the stablecoin market, which has surpassed about $300 billion, continues to grow, the amount of short-term Treasuries held by issuers as reserve assets could also increase.
According to the financial investment industry on the 27th, the Treasury Department will raise its purchases of 10- to 30-year Treasury bonds from $2 billion to $4 billion from next month 9 through November 4.
Market participants are watching not only the effort to support liquidity in long-dated bonds, but also the possibility that short-term Treasuries will play a larger role going forward. Mirae Asset Securities and others said the stronger long-term bond buybacks signal an intention to manage long-term yields, and suggested that the share of short-term bond issuance could rise over the medium to long term.
Stablecoins are being cited as a potential source of demand for short-term Treasuries. The global stablecoin market capitalization stands at about $311 billion. Tether's USDT is worth $183.3 billion, while Circle's USDC is worth $73.7 billion, and the two assets account for more than 80% of the total.
Expectations for stablecoin market expansion have also been reflected in the share prices of related listed companies. Circle Internet Group, the issuer of USDC, has jumped more than 43% so far this month.
As the U.S. regulatory framework takes shape, the link between stablecoins and short-term Treasuries is drawing attention. Once the GENIUS Act, enacted last year, takes effect, issuers of regulated payment stablecoins will be required to hold reserve assets that back at least 1:1 of the amount issued. Permitted assets include cash, deposits, and U.S. Treasury bonds.
The Treasury Department has also previously said that the expansion of stablecoins could increase demand for short-term Treasuries. Citigroup has likewise projected that if regulatory reforms and market growth move in tandem, additional demand for U.S. Treasury purchases tied to stablecoin issuers' reserve management could exceed $1 trillion by 2030.
However, some argue that rising stablecoin issuance cannot automatically be counted as new demand for U.S. Treasury bonds. If funds move from existing money market funds (MMFs) into stablecoins, the demand for short-term U.S. Treasury bonds previously held by MMFs may simply shift to issuers.
Another variable is whether the US Congress will advance the Digital Asset Market Clarity Act. After returning from recess, the Senate is expected to hold a procedural vote on September 15 to decide whether to begin floor debate on the bill. If the bill passes, the jurisdiction of the SEC and the CFTC would become clearer, improving conditions for institutional participation in the market. Still, disagreements remain over ethics rules and stablecoin rewards, leaving uncertainty over whether the legislation will be enacted this year.
In the virtual asset industry, attention is focusing on the expanding role of stablecoins, from idle funds on exchanges to payments, remittances, and on-chain financial infrastructure.
An industry official said, "If actual payment and remittance demand for stablecoins increases, issuance and reserve assets could rise together," adding, "U.S. regulatory reforms will be a key variable linking market expansion with demand for short-term Treasuries."

[email protected] Kim Mi-hee Reporter